Document Type
Working Paper
Publication Date
1-2014
College/Unit
Chambers College of Business and Economics
Document Number
14-07
Department/Program/Center
Economics
Abstract
The income convergence literature suggests that poor countries can catch-up to rich ones conditional on sharing certain characteristics with rich countries. Good institutions such as strong property rights and rule-of-law are key amongst those characteristics. From a policy perspective this is disheartening because economists have little understanding of how to transplant those institutions to developing countries. Worse, good informal institutions seem to be a necessary condition for formal institutions to “stick”. However, to the extent that good institutions can arise as a “spontaneous order” from individuals interacting with one another, allowing for an “open society” may be an effective development policy. To evaluate this proposition we explore whether or not increased globalization fosters income convergence. Based on a panel of up to 184 countries covering the years 1970 to 2009 we conclude that it does. In particular, the social dimension (as opposed to the economic or political dimensions) of globalization is robustly related to income convergence.
Digital Commons Citation
Wolfe, Kaitlyn R. and Young, Andrew T., "Globalization and Income Convergence" (2014). Economics Faculty Working Papers Series. 100.
https://researchrepository.wvu.edu/econ_working-papers/100